USD/CAD: Pair Hover Around 1.3050 Ahead Of Signing Of Trade Deal

The US dollar Canadian dollar exchange rate has barely budged so far this week. The pair is still trading at approximately the same level that it started the week. After opening the new week at 1.3056, USD/CAD is trading at 1.3062 at the close on Tuesday. The pair is holding steady in early trade on Wednesday.

The US dollar traded flat in the previous session following softer than expected US inflation numbers and as investors cautiously awaited the signing of the first phase US – China trade deal.

US inflation, as measured by the consumer price index was a touch weaker than expected in December. Year on year inflation increased 2.3% in the final month of the year However, with US wage growth slowing in recent months to 2.9% the squeeze on household incomes is increasing, putting pressure on spending power. This could limit consumer spending and economic growth should the trend continue.

Today investor attention will shift away from the US economic calendar and fall firmly on trade. The US and China are set to sign the first phase trade deal which was agreed in December. News that the US will not remove more tariffs on Chinese imports until after the US elections dented sentiment ahead of the signing. Investors are still awaiting details of the signing event which have still not been revealed.

Canadian Dollar Focuses On Trade

The Canadian dollar held its ground versus its US counterpart in the previous session as the pair stuck within a familiar trading range.

Canadian dollar investors were also keenly awaiting the signing of the US – Sino trade deal. Canada is a major producer of commodities, most notably oil; its economy could benefit greatly from an improved global outlook. A stronger global outlook could in turn lift future demand expectations for commodities raising their prices and boosting the Loonie.

US crude oil picked up on Tuesday snapping 4 straight losing sessions and lifting the Canadian dollar out of early losses. Crude oil gained following reports by Russian news agency TASS that the OPEC+ meeting scheduled for March could be pushed back to June, with output cuts also extended to the latter date.

There is no high impacting Canadian data due for release today.

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